If a natural disaster were to cause a negative long-run supply shock to the economy, once the economy adjusts, the new equilibrium will be at a:
A. higher price level and lower level of output.
B. lower price level and lower level of output.
C. higher price level and higher level of output.
D. lower price level and higher level of output.
Answer: A
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Firm A producing one good acquires another firm B producing another good. Price elasticity of demand for Firm A's good is -1.8 and Firm's B is -1.8 . Holding other things constant and assuming both goods are substitutes, the acquiring firm should
a. Raise prices on both goods with a larger increase in Firm A's good b. Raise prices on both goods with a larger increase in Firm B's good c. Raise prices on both goods by the same amount d. Lower prices on both goods
Suppose the nominal interest rate is 10 percent annually, and you deposit $1,000. Inflation in the economy throughout the year is 6 percent. At the end of the year, you have earned:
A. a real rate of return of 4 percent. B. an increase in your purchasing power. C. a nominal increase in your savings of $100. D. All of these statements are true.
That part of the deficit that results from a downturn in economic activity is called the __________ deficit
A) net B) gross C) cyclical D) structural
Suppose that all workers place a value on their leisure of 40 goods per day. The production function relating output per day Y to the number of people working per day N is Y = 200N - 2N2and the marginal product of labor is MPN = 200 - 2N.A 20% tax is levied on wages. Output per day would be
A. 9375. B. 11,250. C. 5625. D. 7250.